Gov. Andrew Cuomo is considering a plan that would effectively put New Jersey electric company PSEG in charge of the embattled Long Island Power Authority, Newsday reported last week.
“By giving more operating control to PSEG, we’d be able to freeze the rates, we’d vastly improve customer service, and we’d significantly improve storm preparedness and response,” Cuomo’s secretary Larry Schwartz told Newsday. “You might be able to get the best of both worlds.”
PSE&G is already slated to take over operations of LIPA’s electrical services from National Grid, under a new contract set to take effect in January. That agreement included its own reforms designed to address communication problems that plagued the utility during its weeks-long effort to restore power after Hurricane Sandy, including having PSEG communicate directly with customers instead of funneling information through LIPA administrators.
But the new plan would go much further.
“PSEG would be responsible not only for the operation and maintenance of the electric system, but also would control capital and operating budgets, storm preparedness and response, call centers, computer systems and customer service – just about everything,” reported Newsday.
LIPA was placed under intense scrutiny following its widely panned response to Sandy.
Its COO Michael Hervey resigned, Cuomo opened a Moreland Commission investigation into its storm response and preparedness and debate began on whether to make LIPA a fully public utility, privatize it or maintain its status quo as a management company that does not directly service its lines.
LIPA, which was originally created to absorb the debt-ridden Long Island Lighting Company following the cancellation of the Shorham nuclear power plant, does not manage electrical and gas transmission – rather, it contracts those services out to utilities.
Cuomo’s Moreland Commission recommended outright privatization in an interim report released in January, but the new proposal – which would maintain LIPA as a minimally staffed holding company – would keep the utility eligible for federal storm cost reimbursement, according to Newsday.
The move would increase the cost of PSEG’s 10-year contract beyond the currently budgeted $3.3 billion, but could save money by lessening the need for consultants and outside contractors, Schwartz told Newsday.
LIPA came under heavy fire from Cuomo, local officials and the public when parts of Long Island were left without power for more than two weeks after Hurricane Sandy.
North Shore mayors blasted LIPA in the weeks after the storm for what they described as insufficient and sometimes inaccurate information provided to them and their constituents.
This article previously stated that PSEG is slated to take over gas service from National Grid. It has been corrected to note that PSEG will only run LIPA’s electrical service.
